Available online at
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BAR, Curitiba, v. 6, n. 3, art. 6,
p. 263-279, July/Sept. 2009
The Stockouts Study: an Examination of the Extent and
the Causes in the São Paulo Supermarket Sector
Luis Henrique Rigato Vasconcellos *
E-mail address: lhenrique@espm.br
Escola Superior de Propaganda e Marketing
São Paulo, SP, Brazil.
Mauro Sampaio
E-mail address: mauro.sampaio@fgv.br
Fundação Getulio Vargas
São Paulo, SP, Brazil.
ABSTRACT
Stockouts remain a significant retail problem. Progress has been limited, as estimates of stockout rates in the past
forty years have consistently averaged above 8 percent. The purpose of this study is to investigate the importance
and extent of the stockout problem in the supermarket sector in the state of São Paulo, Brazil, from the
perspective of the supermarket managers themselves. Results suggest that the level of stockouts is high.
Generally, the suppliers are mentioned as being the ones mainly responsible for stockouts. These results suggest
that managers have significant opportunities to reduce retail stockouts by taking preventative actions.
Key words: stockout; retail; logistics; supermarkets.
Received 19 October 2008; received in revised form 06 March 2009.
Copyright © 2009 Brazilian Administration Review. All rights reserved, including rights for
translation. Parts of this work may be quoted without prior knowledge on the condition that
the source is identified.
* Corresponding author: Luis Henrique Rigato Vasconcellos
Rua Itapeva, 474, 8o andar, São Paulo, SP, 01332-000, Brazil.
Luis Henrique Rigato Vasconcellos, Mauro Sampaio
264
INTRODUCTION
This study defines a stockout as a situation where an item that is regularly commercialized at a point
of sale and occupies a specific place on the shelves is not available to the consumer in the store at the
moment of purchase. A stockout is characterized by an inefficient process of refilling shelves. A
stockout rate is precisely the percentage of all the items commercialized that should be for sale, but are
not found on the shelves. A 10 % rate of stockout means, for example, that out of a total of 5,000
items catalogued and commercialized by a supermarket, 500 would not be available on the shelves for
immediate purchase by the final consumer.
Stockouts are increasingly recognized as a retail problem by both researchers and practitioners.
Estimates of stockout rates in retail stores have consistently averaged above 8 percent, the rates
reported from Peckham (1963) to Gruen, Corsten and Bharadwaj (2002) are reasonably similar. Retail
stockout problems have been studied from two major perspectives: measurement of stockout rates in
stores and consumer response to stockouts (Roland Berger, 2003; Zinn & Liu, 2001). Regardless of
the perspective guiding the research, most studies suggest that managers deal with stockouts by taking
action to reduce the number of stockouts as much as possible (Corsten & Gruen, 2003; Roland Berger,
2003).
While taking action to reduce the number of stockouts is clearly an important component of stockout
management, it is likely insufficient to solve the problem. There are two major reasons for this. First,
despite all efforts so far, stockout rates have remained high over a prolonged period of time, as shown
in Figure 1. The rates reported by Peckham (1963) match Roland Berger (2003), remaining around the
level of 8.0 %, while other research published within this forty-year time span reported similar rates.
Second, the stockout problem is becoming more difficult to manage due to the continued trends of
product proliferation, scrambled merchandising and shorter product life cycles. It seems evident that
stockout rates will never be zero.
Figure 1: Percent of Stockout Levels in Previous Studies
15
12,2
8,5
8,2
8,3
% Stockout
10
7,1
5
0
Peckham 1963
Progressive Grocer
1968
Andersen
Consulting 1996
Gruen et. al 2002
Roland Berger 2003
Consequently, stockouts should be managed with a combination of efforts to (1) reduce the number
of stockout instances and (2) offer remedies to manage the consumer’s response whenever the
stockout is unavoidable or is too expensive to eliminate (Anderson, Fitzsimons, & Simester, 2006;
Bhargava, Sun, & Xu, 2006). While international literature is rich in studies along these two lines,
Brazilian literature lacks information about stockouts in its market. The theme is a concern to both
retailers and manufacturers who are equally interested in stockout problems. According to Gruen and
Corsten (2007), in 45 % of the stockout cases the consumers substitute their items, in around 31 % of
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The Stockouts Study: an Examination of the Extent and the Causes in the São Paulo Supermarket Sector
265
the cases they change stores, and in 14 % of the cases they rarely return. Stockouts were, still are, and
apparently will continue to be an important managerial problem.
The purpose of this research is to investigate the stockout rate in supermarket chains in the state of
São Paulo, Brazil, the measurement methods used and the causes from the perspective of the
supermarket managers themselves. Although some business studies about stockouts have been
conducted (Arthur Charles Nielsen [ACNielsen], 2004), there is still a great deal of room for academic
studies.
In short, the article will attempt to answer the following guiding questions:
. How important are stockouts to supermarket managers?
. What method is used for measuring stockouts?
. What is the stockout rate in supermarkets in the state of São Paulo, Brazil?
. What are the main causes and who are the ones responsible for the stockout problems?
In order to make the investigative process about retail stockouts viable, we conducted a survey with
the managers of supermarkets in the state of São Paulo which were affiliated to the Associação
Paulista de Supermercados (Paulista Supermarket Association [APAS]). The results showed that the
stockout rates are high. Supplier delivery delays are the most mentioned cause. This research suggests
that there are opportunities for reduction of stockout rates through joint actions of industry and retail.
The remainder of this article is divided into four sections. The first is a literature review. This is
followed by a description of the methodology used, including the preparation of the questionnaire and
data collection and analysis. The third section contains the results. The conclusions, limitations and
managerial implications are in the fourth and final section.
LITERATURE REVIEW
The retail stockouts literature began at least forty years ago (Peckham, 1963). During this time
frame, most publications have focused on at least one of two broad issues. One is the measurement of
stockout levels in retail stores and the other is the behavior of consumers in response to a stockout.
Consumers may respond to the stockout by either substituting the item, delaying the purchase or
leaving the store. This response set is known by the acronym SDL. The literature is summarized in
Table 1, with special emphasis on SDL behavior because it is the basis for the framework we use to
measure consumer behavior in this research. Much of this literature is also reviewed in Fitzsimons
(2000) and Zinn and Liu (2001).
The first research to investigate stockouts was Peckham’s (1963), which alerted retailers and
manufacturers to potential losses resulting from stockout. In 1968, Progressive Grocer conducted a
survey about stockouts in hypermarkets. Its main contribution was to identify the different consumer
response to stockouts. This set of attitudes is known as the SDL behavior (Substitute, Delay and
Leave) of the consumer in response to stockouts.
Walter and Grabner’s study (1975) proposed a model that charts all possible consumer responses to
stockouts. This model influenced most future studies on stockouts.
Charlton and Ehrenberg’s study (1976) conducted an experiment with traveling salesmen offering
cleaning products door to door. Stockout situations were created. The authors concluded that
consumers were willing to exchange their favorite brand for another one in a stockout situation.
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However, they returned to their favorite brands with the restoration of supplies. The weak point of the
experiment was not to have offered to the consumer the possibility of changing suppliers.
Table 1: Retail Stockouts Literature Related to SDL Behavior
Author
Description
Method
Peckham
(1963)
Measured stockout levels in grocery stores.
Measured also effects on brand loyalty and customer
satisfaction
Exit
Survey
6 17
Progressive
Grocer
(1968)
Documented stockout frequency in supermarkets and
measured SDL behavior
Exit
Survey
28
Walter and
Grabner
(1975)
Proposed a formal model that charted all possible
responses to stockouts.
Survey
Schary and
Christopher
(1979)
Measured SDL behavior with respect to store image,
brand loyalty and demographic variables.
Exit
Survey
Emmelhainz,
Emmelhainz
and Stock.
(1991)
Measured SDL behavior after removing key
products from the shelf
Measured stockout rate and SDL behavior.
Combined store audits, scanner data and personal
interviews with industry and consumers
Multiple
Verbeke,
Farris and
Thurik (1998)
SDL behavior by brand loyalty, store loyalty and
amount of purchase
Field
Experiment
30
Survey
Gruen et al.
(2002)
Measured stockout rates and SDL behavior in a
worldwide study of grocery stores
Secondary
Data
6
Roland
Berger
(2003)
Measured stockout rates and SDL behavior in a
study of European grocery stores
Survey
6
Measured SDL behavior related to brand equity and
hedonic products
Survey
66
15
31
25
42
55
30
27
40
15
21
23
22
21
24
Short-term SDL behavior in terms of consumer and
perceived store characteristics, as well as situational
and demographic variables
Delay
48
83
31
Zinn and Liu
(2001)
Leave
24
39
Survey
Did Not Buy
58
48
Examined product characteristics, consumer
characteristics and situation characteristics as
correlates of SDL behavior.
Sloot,
Verhoef and
Franses
(2005)
19
14
Field
Experiment
Andersen
Consulting
(1996)
Campo,
Gijsbrechts
and Nisol
(2000)
SDL Behavior
62
15
15
27
45
48
48
Substitute
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The Stockouts Study: an Examination of the Extent and the Causes in the São Paulo Supermarket Sector
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The Schary and Christopher study (1979) showed that the clients who left the store due to a stockout
were less satisfied, had a worse impression of the store and were less likely to buy there again. The
survey of Emmelhainz et al. (1991) also measured the consumer’s SDL behavior after removing key
products from the shelves.
In an attempt to explain the consumer’s SDL behavior in response to a stockout, the research
conducted by Zinn and Liu (2001) deeply investigated the influence of other variables, such as:
urgency in purchase of item, promotion, brand loyalty, surprise with stockout, pre-visit agenda and
whether or not the consumer is upset with stockout. Following the same line of reasoning, other
authors (Campo et al., 2000; Fitzsimons, 2000; Sloot et al., 2005; Verbeke et al., 1998, among others)
identified a group of new variables that influenced the consumer’s SDL behavior. According to Zinn
and Liu (2001), situational variables such as urgency and level of planning (planned purchase or
impulse purchase) greatly influence the consumer’s decision.
These findings took the theme of stockout to another level of analysis and generalization. The
reasoning now is that it is necessary to understand the variables that influence consumer behavior in
order to be able to help retail businesses discover new ways to minimize the number of consumers
leaving the store and at least encourage the consumer to substitute the item or delay the purchase.
Schary and Becker’s study (1978) investigated the long-term effect of a stockout condition. The
opportunity arose after a strike in an American national brewery that limited their supply of beer in the
Western United States. Consumers switched brands and started to consume local brands. Thirty
months after the end of the strike, the original market share of the national company had still not been
recuperated. The authors concluded that a prolonged period stockout is likely to cause loss of market
share. Straughn (1991) conducted a similar study in which she analyzed scanner data in a chain of
supermarkets. The author studied the effect of stockouts on the market share of candy bars. The effect
of short-term stockouts was considered negligible; however, the effect of a prolonged stockout
condition for a product (more than five weeks) caused losses of 10 % in market share.
Recent studies indicate stockout rates of 8.3% in supply chains for non-perishable consumer goods.
(Gruen et al., 2002; Gruen & Corsten, 2007; Roland Berger, 2003).
This literature review shows that the study of stockouts is a relevant subject, with the potential to
provide sustainable competitive advantages for those organizations that reduce the incidence of
stockouts and/or regain consumers in an effective way.
In Brazil, one of the few stockout studies was conducted by the Retail Services Division of
ACNielsen Brazil in July 2004. The research analyzed the main causes as well as the attitudes of the
consumers when they do not find the product on the shelf. They studied 528 SKUs (Stock Keeping
Units) in 587 self-service stores with 5 or more checkouts; the result was an average stockout rate of
8.0 %. The study also concluded that the stockout causes are distributed all along the supply chain, but
that the main opportunities for improvement were found between the Retail Distribution Center and
the shelves. However, because the sample was restricted to stores in the capital cities of São Paulo and
Rio de Janeiro, it was not possible to make statistical generalizations.
Despite the importance of the subject, academic research about stockouts in supermarkets of
different formats has still not been conducted, and the causes of the stockouts have not been identified.
This study seeks to fill this gap and explore these issues.
METHODOLOGY
The concept of research is a structure that specifies the details of the procedures necessary to obtain
the information that is indispensable in answering the questions being investigated. The choice of the
research schema depends on how much is already known about the problem situation. Since there is
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already previous knowledge about the issue of stockouts, although there are no convincing academic
results in the Brazilian case, a survey seems to be recommendable, and its goal is to describe the
relationship among relevant variables, such as the main causes of stockouts and the different kinds of
supermarkets. Thus, we have used a single crossing schema, i.e., the information was obtained from a
single sample (the managers of supermarkets affiliated to APAS). The objective of the study was not
to detect changes, but to extract information about the current stockout stage of the target population.
Recall that the objective of this research is to investigate four fundamental issues:
. How important are stockouts to supermarket managers?
. What method is used for measuring stockouts?
. What is the stockout rate in supermarkets in the state of São Paulo- Brazil?
. What are the main causes and who are the ones responsible for the stockout problems?
Variable Selection
The scales used to prepare the questionnaire were based on the previous literature. The list of
probable stockout causes to be investigated was drawn from Gruen et al. (2002) and the methods for
stockout measurement from Roland Berger (2003) and Andersen Consulting (1996). We also used the
scale available in Gruen and Corsten (2007) to measure stockout frequency.
To measure the importance of stockout, we asked the respondents to prepare a rank of eight
previously selected attributes that they felt were related to the final consumer’s satisfaction based on
their experience and perception (Gruen et al., 2002): clerks are friendly, polite and courteous; low
prices; promotions; variety of goods and service; low stockout levels; cleanliness and tidiness of the
facilities; easy physical access and short lines. The purpose was to identify the importance that the
managers themselves attributed to the stockout factor in relation to the other factors.
We also asked to the respondents to select which method for measuring stockouts was used. There is
no consensus in the literature about even the very definition of stockout, for there are different ways of
measuring it (Gruen et al., 2002). According to the committee of retail professionals, stockout can be
monitored by using the following methods: (a) Visual shelf auditing (b) store inventory level (c)
questions asked directly to the consumer and (d) information from the suppliers, as shown in Table 2.
Table 2: Monitoring of the Different Stockouts in the Chain
Method
Concept
Characteristics
Visual ShelfAuditing
Verification of the
availability of the
product on the
shelves.
- Expensive model
- Systematized
- Measurement
focused on items on
sale (self-audit or
outsourced)
- More effective
measurement from
the client’s
perspective
Store Inventory
Level
Calculation of the
availability of store
products based on
the entrance, exit and
store inventory
records.
- Economic model
- Systematized
- Measurement of
100% of the line
- Critical Factors for
Success:
- Accuracy
- Quick refilling of
shelves
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Questions to the
Consumer
Questions asked
directly to the
consumer at the
checkout about their
perception of out-ofstock products.
- Economic model
- Non-systematized
- Measurement of
the consumer’s
perception of lack of
products
- Critical Factors for
Success:
- Commitment of
the cashiers
- Veracity of the
information
Information from
the Suppliers
Information reported
by the supplier’s
employees, such as
grocery clerks (shelf
stockers) and/or
salespeople.
- Economic model
- Non-systematized
- Works with
sampling
- Few suppliers have
clerks or shelf
stockers.
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Each of these ways of measurement has advantages and disadvantages: The audit is a reliable
measurement method; however, it is expensive and uses up the scant resources of the organization.
The measurement of the levels of stock kept in the stores is easily accessed through information
systems. The problem is that the percentage of inconsistencies is high; there is a difference between
the actual physical stock and the stock found in the system, not counting the fact that the products may
be in the storeroom and not on the shelf. The information from the consumer is interesting, but is also
not very reliable, because it depends on the commitment of the cashiers to systematically ask the
consumer. Furthermore, there is the possibility that the consumer simply may not be able to find the
product in the store and may declare it to be stockout. The information given by the suppliers is
reliable, but only a small portion of the supermarket SKUs have shelf stockers paid by the
manufacturers.
Retail problems can occur all along the retail supply chain, from the retail purchaser’s contact with
the supplier’s salesperson to the placing of the product on the shelf, as can be seen in Figure 2.
Figure 2: Retail Supply Chain
The list of the stockout causes throughout this whole supply chain was based on literature, for
example, Gruen et. al., 2002; Gruen and Corsten, 2007; Roland Berger, 2003, and was also discussed
with the committee of retail professionals from the state of São Paulo.
Data Collection and Analysis
Six pre-tests of the questionnaire were conducted with a panel made up of 04 retail professionals and
02 academics. Small adjustments of the language and inclusion/exclusion of variables were made
based on their comments.
The element of the population that has the information necessary for this study is the supermarket
manager. According to the committee of retail professionals, this person is responsible for following
the stockout indicators that occur in his/her establishment. Furthermore, the manager is the one who
ends up suffering the direct consequences of stockouts, such as consumers’ complaints or
penalizations for not having reached the sales goals because the product is not available to be sold.
The team of researchers used a list of 1,000 email addresses of affiliates of the Paulista Supermarket
Association [APAS]. Initially, 54 names were eliminated from the list because they were journalists,
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Luis Henrique Rigato Vasconcellos, Mauro Sampaio
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consultants, professors, independent (not affiliated to a company) or retired. All the other 946 names
of supermarket managers were selected to receive the questionnaire.
The questionnaire was applied in three waves of email, as shown in Table 2. The first wave
consisted of an email in the name of APAS requesting participation in the survey and making the
questionnaire available on an Excel file to be filled out by the respondent. In this email, we spoke
about the relevance of the survey and made it clear that only the respondents would have access to the
final report as a way of encouraging the managers to answer the questionnaire and send it back to us.
After the first posting, 42 email messages were returned along with a notification saying that they
had not been received due to a change of email address. The respondents returned 33 filled-out
questionnaires. Three weeks after the first posting, a second wave of email was sent to the nonrespondents, resulting in 67 valid responses. However, in spite of the responses obtained, the
proportion of hypermarket managers was still considered low in the sample when compared to the list
of members of APAS, characterizing non-representativeness of this segment in the sample received.
Three weeks later, a third wave of email was sent to the non-respondents of hypermarkets. There were
8 responses to this posting. In short, 108 questionnaires were considered valid, resulting in a response
rate of 11.9 %, which was considered satisfactory, because it is in line with that used for other similar
studies in the past (Gruen et al., 2002).
Table 3: Survey Sample
Types
Compact Supermarket
Conventional Supermarket
Hypermarket
Total
Number
of Members
check-outs
Of APAS
1 to 4
805
5 to 19
94
20 or more
47
946
1st
wave
10
18
5
33
2nd
wave
11
47
9
67
3rd
wave
0
0
8
8
Total
21
65
22
108
Percentage
11.90%
Comparing the sample to the population, while the members of APAS have the profile of compact
supermarkets (85%), conventional supermarkets (15%) and hypermarkets (5%), the sample obtained
from the respondents was only 19% of compact supermarkets, 60% of conventional supermarkets and
21% of hypermarkets. As shown in Table 3, the group of respondents is more representative of
conventional supermarkets and hypermarkets and less representative of compact supermarkets with
respect to the total members of APAS. This fact may be explained by the strategic character of the
survey and by the fact that the level of interest in obtaining the answers to the survey is predominantly
larger in more structured organizations, such as the conventional supermarkets and hypermarkets.
The sample was made up of an experienced group of retail managers, as shown in Table 4, of which
57.4% held the positions of directors and/or owners of supermarkets, 15.7% were store managers and
17.6% were professionals in more operational levels (example: purchases). The remaining 9.3% held
positions in other categories.
Table 4: Profile of the Respondents
Position
Operational
Manager
Director
Owner
Other
Total
N
19
17
27
35
14
108
Percentage
17.6%
15.7%
25.0%
32.4%
9.3%
100.0%
The team of researchers evaluated the possibility of the existence of non-respondent bias using the
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extrapolation method or, in other words, comparing the answers to some key questions in the first,
second and third wave of respondents. No significant differences were observed in the averages of the
three groups.
RESULTS
In this section, we present the answers to each of the four research-guiding issues. How important
are stockouts to supermarket managers? What method is used for measuring stockouts? What is the
stockout rate in supermarkets in the state of São Paulo? What are the main causes and who are the
ones responsible for the stockout problems? First, we analyzed the questions which were asked. Next,
we evaluated the answers given by the supermarket managers. The managerial and academic
implications of the results are debated in the last section of the article.
The Importance of Stockouts
Ordinal values were assigned to the attributes so that it was not possible to compare them by
calculating the average. Instead, the median was used to compare the ranks of the eight attributes for
the selection of the supermarket. The results are given in Table 5. Each attribute was classified on a
ordinal scale from 1 to 8, with 1 = most important attribute and 8 = least important attribute. Thus, the
factor with the lower median is classified as the most important, and the factor with the higher median
is the least important.
From the perspective of the supermarket executives, the factor – quality of customer service – was
classified as the most important (median=2) and the factor – short lines – was the least important
(median 6). When the various segments of supermarkets were analyzed, some differences were
identified:
. Compact and conventional supermarkets put more emphasis on the customer service attribute.
. Hypermarkets put more emphasis on the attributes of low prices and promotions.
Table 5: Order of Importance of the Attributes for the Selection of a Supermarket
Factors for Selection
Clerks are friendly, polite and
courteous
Low Prices
Promotions
Variety of Goods and Services
Low stockout levels
Cleanliness and tidiness of the
facilities
Easy physical access
Short lines
Compact
Supermarket
1.0
Conventional
Supermarket
2.0
Hypermarket
General
Importance
5.0
2.0
1st
4.0
4.0
4.0
5.0
6.0
3.0
3.0
4.0
5.
5.0
2.0
2.5
3.0
4.5
4.5
3.0
3.0
3.0
5.0
5.0
2nd
3rd
4th
5th
6th
6.0
6.0
6.0
6.0
5.0
7.0
6.0
6.0
7th
8th
The data from Table 5 shows that the stockout factor was considered the fifth most important
attribute by the managers in all formats of supermarkets. This result is very different from that of
Fisher, Krishnan and Netessine (2006), which identified stockouts as the most important attribute to
explain customer satisfaction in a USA retail chain. It is important to point out that the manager’s
perception may be different from the customer’s perception, but still, the importance attributed to
stockout by the managers seems to be very low compared to the importance attributed to it by the
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customer. This fact in itself may explain the high retail stockout rates, for any subject that is not
prioritized by the manager will more than likely not be improved.
Methods for Measuring Stockout
Based on the data obtained in this research, it is possible to state that the method mostly used by the
managers to measure stockouts is the visual shelf auditing method – in conventional supermarkets
(62%), hypermarkets (82%) and even in compact supermarkets (38%), as shown in Table 6. However,
we have found that more than one method may be used simultaneously.
Table 6: Methods for Measuring Stockouts
Type
Compact
Supermarket
Conventional
Supermarket
Hypermarket
Total
Visual Shelf
Auditing
Level of Stock
24%
Questions to
the consumer
at checkout
33%
Information
from
Suppliers
5%
Store
doesn’t
stockouts
24%
38%
62%
52%
58%
32%
5%
82%
61%
73%
51%
64%
55%
36%
33%
0%
3%
Stockout Rate
The supermarket managers reported that the average stockout rate of supermarkets in the state of São
Paulo is 8.3, % with a standard deviation of 6.8, as demonstrated in Figure 2. This means that of every
100 items catalogued in the store, 8.3 are not on the shelves.
Figure 3: Stockout Rate of the Supermarkets of the State of São Paulo
The research revealed that the stockout rate for compact supermarkets is 9.1 %, the rate for
conventional supermarkets is 8.5 %, and for hypermarkets 7.1 %, as shown in Table 7.
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Table 7: Stockout Rate
Type
Responses
Average
Standard Deviation
Compact Supermarket
14
9.1
9.2
Conventional Supermarket
60
8.5
6.8
Hypermarket
21
7.1
5.2
Total
95
8.3
6.8
This result was not surprising. The stockout levels are high; nevertheless, the stockout rates are
similar to those found in supermarkets in developed countries. These levels were made possible due to
the privileged conditions of the logistics infra-structure of the state of São Paulo compared to other
Brazilian states. The news is that these numbers are similar in supermarkets of different sizes. In order
to evaluate whether there is a statistically significant difference of stockout averages from one size of
store to another, we conducted the Analysis of Variance Test [ANOVA] of one factor. The result
revealed that there is no significant difference (0.10) in the averages of the different groups. However,
it is important to note that the number of items managed by the supermarkets is also smaller, making it
easier to maintain the stockout rates at levels equivalent to those of the hypermarkets.
The result found is equivalent to the one published in the ACNielsen study (2004), the only research
conducted in Brazil about stockout rates in supermarkets. It is also important to note that the problem
is a chronic one. Managers tend to accept the problem as if 8.3 % were a normal level of occurrence.
Table 8 compares the values given by the managers (1: low; 7: high) to the stockout levels in
different categories of products in the three formats of supermarkets using the method of Analysis of
Variance [ANOVA]. The focus of the analysis was to identify the products that show significant
differences in their averages. It was nothing new to observe that the stockout rate varies according to
the stores and formats. We also noticed some other significant differences from one format to another.
The smaller supermarkets have more problems with stockout in the categories of drinks and bazaar.
However, based on this research, we are able to state that the category of items that mostly concerns
the retail managers is the one that includes hygiene, health and beauty products, because every format
of supermarket selected it as the most critical category.
Table 8: Averages of the Values Given by the Managers to the Stockout Rates in Different
Categories of Products
Category1
Hygiene, health and beauty
Bazaara
Cleaning Products
Grocery
Perishables
Alcoholic Beveragesb
Non-alcoholic Beveragesc
Compact
Supermarket
3.
2.9
2.7
2.7
3.0
2.
2.6
Type
Conventional
Supermarket
3.3
3.3
2.9
3.0
2.9
2.3
2.0
Hypermarket
Statistic F
P value
3.1
2.3
3.3
2.9
2.6
1.6
1.7
0.539
2.922
1.090
0.398
0.371
3.377
3.379
0.585
0.059
0.340
0.672
0.691
0.038
0.038
1. Averages compared by the post hoc test using the method of “least significant difference” [LSD].
a) Compact Supermarket > Hypermarket
b) Conventional Supermarket > Hypermarket
c) Compact Supermarket > Conventional Supermarket / Hypermarket
Table 9 examines the frequency of stockout occurrences related to the days of the week and weeks
of the month. According to the perspective of the supermarket managers, stockouts occur more
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frequently at the beginning of the week (on Sundays, Mondays and Tuesdays). This probably occurs
due to the growth in demand on these days, but also because of poor refilling of supermarket shelves
with products from the suppliers to the retail distribution center and/or from the distribution center to
the stores on Sundays. This information is important, for it could indicate a way to minimize retail
stockouts. The daily and continuous work of refilling shelves may minimize the stockout rates found
on the weekends.
Table 9: Stockout Frequency – Days of the Week and Weeks of the Month
Type
Compact
Supermarket
Conventional
Supermarket
Hypermarket
General
Monday
4.47
Tuesday
3.68
Wednesday
2.65
Thursday
2.21
Friday
1.89
Saturday
3.16
Sunday
4.21
4.51
3.11
2.77
2.43
2.41
2.39
3.07
4.05
4.40
2.38
3.06
2.29
2.64
1.86
2.26
1.81
2.18
2.57
2.58
3.10
3.31
2nd
2.74
2.48
2.33
2.50
3rd
2.79
2.47
2.14
2.46
4th
2.89
2.69
2.38
2.66
5th
2.42
2.82
2.7
2.72
Type
Compact Supermarket
Conventional Supermarket
Hypermarket
General
Week
1st
3.11
2.84
2.81
2.89
Main Causes of Stockouts and Those Responsible for Them
The managers’ perception of the stockout causes and those mostly responsible for them is shown in
Table 10. The impact of each cause was evaluated by posing the following question to the retail
manager: ‘In a typical month, stockout caused by factor is…’, and measured by using a seven point
scale, where 1 meant ‘occasional’ and 7 meant ‘frequent’. In this case, we admit the null hypothesis
that the average of the perception of the stockout cause isn’t different from 3 using the t sample test.
The results of the test are shown in Table 10. The items greater than 3 and which are significant are
shown on the upper part of the table, and the items of little importance and significance are shown on
the lower part of the table.
The results show that the managers of every kind of supermarket format consider the flaws in the
supplier logistics process, such as delay in delivery and/or incorrect delivery of the order, to be the
main cause of stockouts. This result was unexpected, considering that previous studies pointed to the
retailers themselves being responsible for 75% of the stockout problems (ACNielsen, 2004; Corsten &
Gruen, 2003). Compact supermarkets also pointed to insufficient shelf space as one of the main
motives for out-of-stock products, revealing a problem of planning of space occupation of the shelves.
Conventional supermarkets, in addition the problems with the suppliers, have internal problems of
refilling shelves and delay in generating the orders. Finally, it is interesting to observe that the
hypermarkets did not identify the lack of shelf stockers as one of the main reasons for the stockouts,
when most of the international literature stockout studies elected them as the main retail problem.
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Table 10: Causes and Those Responsible for the Stockout
Causes for Stockouts in Compact Supermarkets
Supplier delayed the delivery
Insufficient shelf space
Supplier did not deliver the order correctly
Supplier does not have the product available
Store ordered incorrectly
Shelf was not refilled by the promoter (the product is on the storage shelf)
Merchandise badly positioned on the shelf
Merchandise badly positioned in the storeroom
Store took too long to order
Inventory error (difference between the physical and the accounting)
Lack of professionals to adequately refill the shelves
Parameter errors of the shelf refilling system
Causes for Stockouts in Conventional Supermarkets
Supplier delayed the delivery
Supplier did not deliver the order correctly
Supplier does not have the product available
Shelf was not refilled by the promoter (the product is in the warehouse)
Store took too long to order
Merchandise poorly positioned on the shelf
Buying Center is negotiating with the supplier (pre/margin)
Inventory error (difference between the physical and the accounting)
Insufficient shelf space
Store took too long to order
Parameter errors of the shelf refilling system
Inventory errors in the central systems
Lack of professionals to adequately stock the shelves
Merchandise poorly positioned in the storeroom
Causes for Stockouts in Hypermarkets
Supplier delayed the delivery
Supplier did not deliver the order correctly
Inventory error (difference between the physical and the accounting)
Shelf was not refilled by the promoter (the product is in the warehouse)
Supplier does not have the product available
Parameter errors of the shelf refilling ystem
Merchandise poorly positioned in the storeroom
Inventory errors in the central systems
Store took too long to order
Store ordered incorrectly
Lack of professionals to adequately stock the shelves
Merchandise poorly positioned on the shelf
Insufficient shelf space
Buying Center is negotiating with the supplier (pre/margin)
*“In a typical month, stockout caused by factor is…” (1=occasional;
7=frequent)
**One Sample t- test (Ho : average =3)
average*
4.40
3.74
3.19
3.15
3.16
3.11
2.76
2.80
2.75
t**
3.074
1.933
0.594
0.370
0.334
0.276
-0.576
-0.698
-1.000
p-value
0.006
0.069
0.559
0.716
0.742
0.786
0.571
0.494
0.330
2.52
2.33
2.05
-1.420
-1.719
-2.557
0.171
0.104
0.020
average*
5.20
4.72
4.18
3.84
3.39
3.21
3.23
3.22
3.02
2.92
2.88
2.80
2.79
t**
8.127
6.609
4.438
3.766
2.194
1.097
1.026
0.877
0.075
-0.394
-0.477
-0.754
-1.053
p-value
0.000
0.000
0.000
0.000
0.032
0.277
0.310
0.384
0.941
0.695
0.636
0.455
0.297
2.60
-2.206
0.031
average*
4.73
4.00
3.55
3.36
3.27
3.00
2.59
2.40
2.50
2.41
2.38
2.14
2.09
2.10
t**
5.131
3.040
1.449
1.402
0.689
0.000
-1.278
-1.476
-1.755
-2.200
-2.358
-2.988
-3.360
-3.943
p-value
0.000
0.006
0.162
0.176
0.498
1.000
0.215
0.156
0.094
0.039
0.029
0.007
0.003
0.001
The implications of these results to professionals and researchers in the areas of Logistics and
Supply Chain Management are presented next.
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CONCLUSIONS, LIMITATIONS AND MANAGERIAL IMPLICATIONS
Bearing in mind that the objective of the survey was to investigate stockout rates in the supermarket
chains in the state of São Paulo-Brazil, their causes and those responsible for them from the
perspective of their own managers, the study evaluated different formats of supermarkets: compact,
conventional and hypermarkets.
Conclusions
The stockout rates in the supermarkets of the state of São Paulo are very high, but compatible to the
levels of supermarkets in more developed countries. The supermarket managers reported that the
average stockout rate is 8.3%, and no significant differences in stockouts were found in the different
supermarket formats. Shelf auditing is the measurement method that is used the most in retail. The
results show that, in the opinion of the supermarket manager, the supplier is the one mostly
responsible for stockouts. A summary of the result of the research is found in Table 11.
Table 11: Summary of the Conclusions
Format
Measurement
Compact Supermarket
Visual Shelf
Auditing
Main Causes
9.1 %
Supplier delayed the delivery
Insufficient shelf space
Conventional Supermarket
Visual Shelf
Auditing
8.5 %
Supplier delayed the delivery
Supplier did not deliver the order correctly
Supplier does not have the product available
Shelf was not replenished
Store took too long to order
Hypermarket
Visual Shelf
Auditing
7.1 %
Supplier delayed the delivery
Supplier did not deliver the order correctly
The stockout factor was considered the fifth most important factor by the managers in all kinds of
supermarket formats. Compact and conventional supermarkets focus more on the factor of customer
service. Hypermarkets focus more on the factors of low prices and promotions. This result is very
different from the one found by Fisher et al. (2006), which identified stockouts as the most important
factor in explaining customer satisfaction in an American retail chain. There is an incompatibility
between the literature and the perception of the managers of Brazilian supermarkets. Fisher et al.
(2006) state that managers should focus on improving two areas in order to attract their clients:
stockout reduction and investment in the training of their employees. If Fisher et al.’s results (2006)
are reproduced in the Brazilian culture, changes in focus will need to be made by Brazilian retail
managers.
The category of items that mostly concerns the retail managers is hygiene, health and beauty, for all
the formats of supermarkets selected this category as being the most critical. The manufacturers of
these items should also be concerned, considering that a significant percentage of consumers tend to
change brands when there is a stockout.
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Stockouts happen most frequently on Sundays, Mondays and Tuesdays, probably because of the
growth in demand and lack of shelf refilling on the weekends. This information is important, because
it could indicate a way to minimize retail stockouts. The continuous daily work of refilling shelves
could minimize stockout rates found on the weekends.
There are many causes of stockouts. The research shows that the supermarket managers consider the
flaws in the supplier logistics process, such as the delay in delivery and/or incorrect delivery of the
order, to be the main cause of stockouts. This result was unexpected, considering that previous studies
pointed to the retailers themselves as being responsible for the stockout problems (ACNielsen, 2004;
Corsten & Gruen, 2003). This shows that the results of international research may not correspond to
the Brazilian reality. The committee of retail professionals has said that stockouts vary a great deal
from one supplier to another and according to the region of Brazil, and that high levels of stock do not
necessarily guarantee the availability of products. As a result, the retailers and the manufacturers
should use caution in considering the results of the stockout research from other countries, and should
invest in the knowledge of their own reality.
Limitations
There are limitations in this research as in any other. The first limitation is the size of the sample of
108 respondents compared to the supermarket population of the state of São Paulo. We have only
1,000 retail professionals affiliated to the APAS; however, the number of supermarkets of the state of
São Paulo is 12,425 units (ACNielsen, 2007). Another limitation is the regional focus of the study –
the state of São Paulo – which prevents discussion and the comparison of stockout rates with those of
different states; results may be different in another region. The group of respondents is also more
representative of conventional supermarkets and hypermarkets and less representative of compact
supermarkets with respect to the total members of the APAS.
Finally, the research was done using a list of email addresses to facilitate the collection of data. The
answer rate might be higher using traditional mail with adequate incentive systems. However, the
financial resources made available to conduct this study were a determining factor in the selection of
the electronic channel for the collection of data.
Managerial Implications
This study suggests that the stockout percentages are high, but can be reduced through joint actions
of industry and retail in order to achieve more effective results.
The first step is consistent stockout measuring. An automatic system of stockout measurement needs
to be created. Visual shelf auditing is the most adopted and recommended method. Despite the high
cost it incurs for obtaining information, it is the most reliable method. It is important for the retailers to
get all their own employees and the suppliers’ employees involved in this activity, in order to not only
reduce the cost of data collection, but also to help with the solution of the problems identified.
It is essential to identify the causes to be able to generate corrective actions. One important
recommendation is the application of the concepts of the Toyota Production System [TPS] to the retail
processes for reduction of stockouts and waste, which involves managerial actions, such as:
implementing the Just in Time [JIT] philosophy to reduce inventory, using techniques of Statistical
Process Control to monitor the performance of the main items and to identify the problems,
implementing the technique of Quality Control Circles [QCC] and Plan-Do-Check-Act [PDCA] to
engage the people in the solution of the problem, exchanging information with the suppliers in order
for them to help administrate the availability of products in the store and others.
It is also important for retailers to observe stockouts and how consumers react to them. As we have
mentioned before, previous studies show that for several decades stockout rates among retailers have
not declined. We have also seen that the probability of stockouts being eliminated 100% is very small.
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Therefore, it is reasonable to accept that a certain stockout level will always exist, and that offering
remedies to keep consumers from leaving the store is another efficient way to manage retail stockouts.
Opportunities for Future Studies
One of the aspects that mostly called the attention of the researchers was the low relative importance
given to stockouts by the managers, being rated after items like customer service, low prices,
promotions and variety of goods and services, respectively. The question that arises from this
conclusion is: Would the issue of stockouts be given the same relative importance from the
consumers’ point of view as it was given in this research from the managers’ point of view? Fisher et
al. (2006) point to exactly the opposite. They cite the issue of stockouts as one of the most important
factors that affect customer satisfaction with a retail chain. Therefore, a more detailed investigation of
the theme in the Brazilian scenario would be appropriate.
Another theme that the researchers came into contact with during the study, and which they were
particularly interested in, was that of the possible consumer reactions to a stockout. Although the
possible consumer behaviors represented by the acronym SDL (substitute the item, delay the purchase
or leave the store) have been explored by international literature (Gruen et al., 2002), and have also
been considered in a case of specific/practical application by a study such as the one conducted by
ACNielsen, there is no more detailed academic investigation of the matter. Questions remain, such as:
What is the reaction of the Brazilian consumer to stockouts? Are there significant differences in
reactions depending on the categories of products? Does the social position of the consumers have any
influence on their reactions to stockouts? The unfolding of the stockout issue and its pointing to
studies that involve the consumer seem to be fertile ground for future investigations, and indicate a
possible path to be followed by researchers.
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